With the ongoing distress caused by COVID-19, the world seems to begoing through entirely unanticipated times.Since the nationwide lockdown has continued for over 70 days now, it has also caused financial distress to many.To help counter the problems, many banks and other financial institutions are providing personal loansto theirexisting customers, pension and salary account holders. The COVID-19 specific personal loans may have lower rates of interestto help you come out of a cash crunch possibly caused by the pandemic.
Let us examine if taking a personal loan during this pandemic is a good idea or not.
Loan Eligibility
For getting a personal loan, you must meet the eligibility criteria that can vary for different banks. The general criteria for personal loan eligibility during this pandemic are as follows:
| Criteria | Requirement |
| Age | Above 21 years |
| Status of Employment | Employed or in-business for more than 2 years |
| Net Monthly Salary | Above Rs 15,000 |
| CIBIL or Credit Score | 750+ |
| Employment Type | Salaried, business owner, self-employed |
| Maximum EMI | Up to 65% of monthlyincome |
You can also read about COVID-19 relief packageand know more about personal loan eligibility criteria. Apart from this, you can use anonline EMI calculator to understand your eligibility better. Moreover, you should have a good loan repayment history to get acceptance for your application.
Factors Responsible for Loan Eligibility
- Credit Score
You should have a CIBIL or Credit score of above 750 to get your personal loan approved during this pandemic. Your application is likely to get rejected if you have lower CIBIL scores. It is advisable to maintain a better rating by clearing credit dues before applying for a personal loan during the COVID-19 pandemic.
- Employment Status
Banks and NBFCs look for employment stability of their applicants. If you are a salaried person, self-employed or a business owner, you must have a minimum of Rs 15,000 as net monthly income to avail a personal loan. Also, you must be above 21 years of age to get the application started in the first place. Stable employment status is generally preferred with a working experience of more than 2 years as banks anticipate return of the loan amount in the form of EMIs.
- Debt to Income Ratio
Lower debt to income ratio is a preferred scenario for the bank to approve your personal loan. A lower debt to income ratio gives banks a surety that the amount will not add to non-performing assets.
Loan Amount and Interest Rates
Usually, personal loan amount ranges between Rs 50,000 to Rs 20,00,000 in a typical scenario. Since we have a COVID-19 pandemic situation, banks are lending a personal loan between Rs 25,000 to Rs 5,00,000 to meet the liquidity requirements of people. Also, the interest rates have been lowered, starting from 7.2% up to 10.5% per annum with no or low personal loan processing fee.
Loan Tenure
Personal loan tenure ranges between 6 months to 3 years.
The scope of accepting personal loan during COVID-19 pandemic is limited to existing customers meeting eligibility criteria. Many banks are also offering instant digital personal loans to a select group of customers.
Resolve Your Cash Crunch with Personal Loan
If you are facing a cash crunch issue, you can boost your financial health during COVID-19 with a personal loan.As the assessment norms have been relaxed with a lower rate of interest, you can avail the facility after you match the eligibility criteria. Many reputable banks in India such as Axis Bank are offering personal loans to help you get a financial booster as the world walks towards a new normal. The bank also provides zero charge facility on foreclosure and part payment to make it easier for you.
A Personal loan can be a good choice if you have a good credit history and are facing a cash crunch during this pandemic.
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